Readers Question: What are the consequences of competition between supermarket affiliated petrol stations and independent petrol retailers? Before the supermarkets entered the market for selling petrol, there was much less competition in the market for petrol. Therefore, independent retailers were able to set higher prices and gain higher profit margins. I believe prior to the …
Readers Question: i was wondering if u could give me some insight on how these macroeconomic factors will affect household consumption in 2008/2009. thanks Consumer Spending in the UK This graph shows the strong correlation between consumer spending and economic growth. Since 2005, consumer spending has continued to increase at an average of about 3% …
Readers Question: How and why do firms use derivatives to hedge risk? Financial derivatives are a mechanism for managing risk. They involve options to buy or sell at a certain price in the future. This means that a firm can guarantee being able to buy or sell a contract at a certain price. Why Firms …
Why do Firms Make some Goods Unattractive/difficult to buy? It may seem strange but sometimes firms purposefully want to make a good unattractive. Why is this? Tesco value products have an unattractive design. It shouts out “I’m cheap and low quality”. What happens is that customers with inelastic demand, – people who give importance to …
Although, the government has tried for several months to avoid this option, Alastair Darling admitted that the government had decided to nationalise the beleaguered bank Northern Rock. It means the government is responsible for over £100m of mortgages and savings. What Nationalisation Means Shareholders are likely to get very little in compensation. They have threatened …
Readers Question: Which businesses are likely to benefit from a recovery in the housing market? I think it is a little premature to talk of a recovery in the housing market. But, nevertheless when there is a recovery in the housing market the following firms will benefit. House Builders. At the moment there is a …
there is a saying if one person dies it is murder, if hundreds of people die it is mass murder and if it is thousands of people it is an act of God. If a single mother gets £20 a week benefits she is a ‘scrounger’ If you avoid paying £1000 tax, you are a …
Already since the start of the year the FTSE-100 has fallen 7%. Yesterday, the stock market fell 3% of 190 points on fears related to the growing credit crunch. In particular, American bank Citibank wrote off $18billion from its mortgage defaults. It hopes this will draw a line under the losses in the derivatives market. …